The airline is presently offering its passengers to join in a club that entitles them to use the club facilities. The controller ascertained that all variable costs can be avoided if the club operation will be discontinued including some fixed costs:

1. Supervisors salaries $200,000

2. Airport fees 50,000

3. Depreciation on some equipment 100,000

A report showed a net loss from this department:

Sales Revenue 2,000,000

Less: Variable Costs

Food and beverages 700,000

Labor costs 400,000

Variable overhead 250,000

Contribution margin 650,000

Less: Fixed Expenses

Depreciation on furniture & equipment 300,000

Supervisors salaries 200,000

Insurance 100,000

Airport fees 50,000

General overhead, allocated 100,000

Net loss (100,000)

What will be the decision of the airline company? Provide solutions to your answer using the total cost and differential approach.